Oil Rallies, Euro Shrugs Off Catalan Risk: Market Update

Overview

The Catalonia independence stance is not fazing investors, as European stocks edge upwards. Equities have been especially resilient to bearish news lately as investors shrug off any sign of potential risk quite quickly.

Strong hard economic data and earnings reports have helped to support the euro through Spain’s internal spat. The single currency has climbed 0.4% against the dollar, reclaiming some of the losses made last week.

Hopefully bringing some clarity to the Spanish crisis, Catalan leader Carles Puigdemont will speak to Catalonia’s regional parliament later today. Puigdemont could trigger independence, although the move would not be recognised by Madrid.

The euro may have already absorbed the risk of a declaration of independence however Madrid’s IBEX 35 continues to fall, giving up 0.8% of its gains. Though the index remains 2% above the low it hit last week.

Equities

This morning, US equities are feeling more positive, trading mostly in the green before the US opening bell. The Dow Jones is 0.15% stronger, while the S&P 500 is 0.12% higher. The tech-heavy Nasdaq 100 has climbed 0.19% as earnings season gets underway.

Meanwhile, European stocks are also trading upwards. Eurozone’s proxy, the DAX 30 has added 0.2% to its value, while France’s CAC 40 has inched up by 0.17% so far today.

The FTSE 100 is ignoring the stronger pound, up a stunning 0.47% today.

Forex

The dollar is 0.36% weaker against a basket of major currency pairs. Investors are favouring its number one alternative, the euro, which is 0.5% stronger against the greenback. Supportive economic data and a constant stream of Washington drama drove investors into placing bullish bets on the euro.

The pound was supported by better-than-expected Manufacturing Production data. Forecasts were at 0.2%, while the actual result came in at 0.4%. The data fits in with a prominent narrative of the UK’s resilience to the perils of Brexit. Additionally, UK prime minister Theresa May, has complied a trade plan in the event that that there is no deal with the European Union.

After a bearish start to the week, the Turkish lira has rebounded slightly, up 0.6% against the dollar. This comes after a 2.4% drop on Monday, USDTRY is at TL3.678.

The Japanese yen is 0.3% stronger per dollar as safe-havens see an overall boost in profits.

Commodities

Investors are seeking shelter in gold, up 0.7% so far today – replenished concerns over North Korea’s missile programme has pushed investors into the precious metal.

Oil prices have stabilised after Saudi Arabia announced it would curtail the barrels of crude allocated for export, supplying the commodity at a level below the demand curve. International benchmark, Brent oil, has added 1%, trading at $56.20 per barrel, while US benchmark, crude oil, climbed 1.07%, now just above the psychological level of $50.